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Seagram Company Limited

When the Bronfman family left Russia in 1889 they were well-off, but upon coming to Canada and discovering that the Canadian climate did not suit farming the tobacco upon which they'd become wealthy, they had no source of income.

Seagram Company Limited

Seagram Company Limited was a producer of distilled spirits and wines with head offices in Montréal. The company was incorporated in 1928 as Distillers Corporation-Seagrams Ltd, as a holding company to acquire the capital stocks of Distillers Corporation Ltd and Joseph E. Seagram & Sons Ltd. It gained a certain notoriety in the prohibition era and enjoyed a certain celebrity thanks to the colourful nature of its owner, Samuel Bronfman (see Bronfman Family).

Early History

When the Bronfman family left Russia in 1889 they were well-off, but upon coming to Canada and discovering that the Canadian climate did not suit farming the tobacco upon which they'd become wealthy, they had no source of income. The family patriarch, Yechiel (Ekiel), worked as a labourer for the Canadian Northern Railway, forced to leave his family behind to live in a small shed he'd been able to buy. He soon found a better job in a sawmill and he and his sons started selling firewood, and frozen whitefish in winter. Their next occupation was trading horses, which led them to the hotel and bar business.

When prohibition was enacted in Canada, the laws varied by province, but in general closed legal drinking establishments and forbade the sale of alcohol as a beverage and its possession and consumption except in a private dwelling. Some provinces exempted native wines. Alcohol could be purchased for industrial, scientific, mechanical, artistic, sacramental and medicinal uses and distillers, brewers and licensed producers could sell their product outside the province. With such imprecise laws, the Bronfmans saw opportunities for profit and left the hotel business to go into liquor retailing, purchasing the Bonaventure Liquor Store Company near Montréal's downtown railway station.

In the early 1920s, the Bronfmans opened their first distillery in La Salle and incorporated under the name Distillers Corporation Ltd. In 1926 the company sold a 50% interest to Distillers Company, an amalgamation of British distillers controlling more than half the world's market in scotch. At the same time, the distillery owned by Joseph E. Seagram, founded in 1883, went public. In 1928 the Distillers Corporation acquired all stock in the Seagram business and became a public company, Distillers Corporation-Seagrams Ltd. The company grew through the prohibition era by selling alcohol in the US where prohibition laws were stricter than in Canada, but by 1930 profits were down and it was becoming increasingly dangerous to transport alcohol to the US.

Post-Prohibition

American prohibition ended in 1933 and in 1934 an investigation into liquor smuggling resulted in the arrest of the Bronfmans. The case was dismissed a year later. Sam Bronfman had anticipated the end of prohibition and stockpiled and aged whisky; in 1933 his company held the largest private stock of aged whisky, which allowed it to expand and monopolize the business and establish Joseph E. Seagram & Sons Inc to operate their American venture.

Bronfman worked to change the image of whisky-drinking, replacing the dubious view of it that had grown during the bootlegging era with a more respectable and sophisticated one. Blending and aging became Seagram's hallmark. The Bronfman brothers revolutionized liquor marketing by selling their product in bottles, rather than in barrel consignments, which allowed them to maintain control over the product that reached consumers. The practice became industry standard. Seagram sales at the end of 1936 reached $60 million in the American market and $10 million in Canada. By 1948 total sales exceeded $438 million, and the company's profit was $53.7 million.

Expansion and Diversification

In the 1940s the Seagram company expanded into wine and then went in a dramatically different direction in the 1950s when Bronfman invested in Alberta oil. In the 1960s Seagram acquired the Texas Pacific Coal and Oil Company, merging it with the Frankfort Oil Company, purchased earlier, to form Texas Pacific Oil Company Inc, with Sam Bronfman's oldest son, Edgar, as president. As Seagram expanded into oil and coal, Edgar expanded the company's lines of rum, scotch and bottled cocktails and began importing white wine. At the end of 1965, the company had operations in 119 countries and sales exceeding $1 billion.

Through the 1960s, blended whisky dropped considerably in the hard liquor market, but Seagram's high-end products (Crown Royal, Chivas, V.O.) maintained their growth. Edgar branched out in another direction in the late 1960s by purchasing stock in MGM. He became the studio's chairman in 1969 and in 1970 MGM lost $25 million. Bronfman resigned.

In 1975 the company name was changed to The Seagram Company Ltd and earnings dropped by 9% to $74 million. Edgar reorganized the company's executive and put his brother Charles Bronfman at the head of the new executive committee. In 1977 Seagram recorded a net profit of $84 million. The company continued to expand in the liquor business and in other areas, although in 1980 it sold its oil, gas and related properties in the US to Sun Co, Inc.

In the late 1980s, Edgar Bronfman named his younger son, Edgar Jr, as his successor. In 1988 Seagram acquired Tropicana, the fruit juice and beverage maker, which it sold in 1998 to PepsiCo. Edgar Bronfman Jr took the Seagram company back into the entertainment industry in 1993 with the purchase of 15% of US media giant Time-Warner. Seagram became a major company in the entertainment field with its 1995 purchase of 80% of MCA Inc, now called Universal Studios Inc. The sale included Universal Pictures film studios, MCA Television Group (renamed Universal Television Group), Putnam Berkley Group publishing unit (which Seagram sold in December 1996 for $330 million), MCA Music Entertainment Group (later known as Universal Music Group), Universal theme parks, and Spencer Gifts, a chain of specialty gift shops. Also in 1995, Seagram sold its 24% interest in E.I. DuPont de Nemours and Co, the largest chemical company in North America. In 1998, Seagram announced that it would acquire PolyGram NV, the world's largest music company.

Sale to Vivendi

In 2000, Edgar Bronfman Jr announced the sale of Seagram to the French conglomerate Vivendi in a shares agreement that saw Vivendi pay $42 billion principally in the exchange of shares. The Bronfmans retained 25% of the merged company called Vivendi Universal, with Jean-Marie Messier at the head. The Seagram liquor properties were sold to Pernod Ricard and Diageo, which went practically unnoticed in the publicity over the merger. The Vivendi operation proved to be unstable and the newly merged company began bleeding money within days. Messier began buying more companies over the objections of the Bronfmans. Within a year, Messier had been dismissed and Vivendi Universal share values had dropped from $77 per share to less than $25. In 2003, with the Seagram company gone, Vivendi sold the Seagram building and auctioned the Seagram art collection to pay its debts.